SPX Plunges 11%: Is This the Stealth Setup for a Monster Rally?

Blood in the streets—or just Wall Street's latest fire sale? The SPX's brutal 11% nosedive has traders scrambling. But here's the kicker: every crash plants seeds for the next boom.

Market Mechanics on Life Support

Liquidity's thinner than a VC's patience during a bear market. Algorithmic traders are stuck in feedback loops—selling because others are selling. Classic.

The Silver Lining Playbook

Remember 2022? 20% drops became 120% rebounds for crypto's elite. Traditional markets move slower, but the rules haven't changed. Fear creates the best entry points.

Institutional FOMO Waiting Room

Pension funds are currently 'reassessing risk' (read: watching from the sidelines). The second volatility dips, they'll pile in like it's a private equity fee structure—opaque and overpriced.

Bottom line: This isn't 2008. Central banks have crisis PTSD and will flood zones with liquidity at the first whiff of systemic risk. The real danger? Being underinvested when the trapdoor snaps shut.

Derivative metrics confirm SPX bearish dominance

There has been a notable bearish trend over the past few days, as a recent analysis of the Open Interest (OI) Weighted Funding Rate revealed.

As of writing, the OI Weighted Funding Rate has remained negative since the 17th of June—a MOVE last observed between the 15th and the 18th of April.

Source: CoinGlass

A considerable decline in this metric confirms bearish sentiment in the derivative market, as most unsettled contracts are from short traders selling the asset.

This suggests that despite the drop in Open Interest—currently down 10% to $117 million, implying lower liquidity—sellers have held their position in the market.

Bullish flag forms—but support must hold

At press time, SPX’s trading volume had dropped by 41.45% in the past 24 hours to $270.92 million. A simultaneous decline in both trading volume and price indicates weakening momentum.

This weakening suggests that selling pressure may soon ease, and a bounce back could be imminent.

An analysis of SPX’s price movement on the 4-hour chart reveals that the asset is trading within a bullish flag pattern and is currently in a consolidation phase.

Source: Trading View

Typically, a breakout from this phase leads to a significant rally. The bounce to the upside could occur soon, as the price currently rests on a minor support level within the channel at $1.29.

However, if this level fails to hold, SPX could fall to the lower boundary of the channel—where it may stage a major rebound.

Traders attempt to exit, pressure mounts

Spot market activity indicates that the current support level—where SPX has made a slight rebound—may soon be breached.

At the time of analysis, over $536,000 worth of SPX had been sold, adding further downward pressure and threatening a potential upward move.

Source: CoinGlass

This action comes amid declining confidence in the memecoin, as traders attempt to secure profits or minimize losses.

This is evident in the simultaneous sell-off and falling price. If this trend continues, SPX is likely to retest the channel’s support level—where a major rally could follow.